Tesla’s Musk pulled the plug on a settlement with the SEC at the last minute
cnbc.com
cnbc.com
What is he even thinking here? The evidence seems pretty clear that he did not have funding or investors secured at the time of the $420 tweet — judging by the unprepared and panicked reaction of his investors and executives an hour afterwards. Is Musk claiming that he truly did have funding secured despite all external evidence to the contrary?
I really hope this won’t also be his mentality for fighting the libel suit.
Results: Stocks jump upwards, hopefully enough to hurt the short sellers and make them back off. The short sellers have / had been paying heavily to portray Tesla negatively in the news, just look at the coverage that one accident with a Tesla on autopilot through a construction zone had, or the coverage Tesla gets when there's a fire (while a thousand gas powered cars go up in flames during the media outburst).
Potential consequences: SEC on his ass. I don't think it'll end well for him. If he's lucky he just gets a big fine and gets to keep helming Tesla and SpaceX. This settlement was probably the best deal for him (financially) and only a fraction of the money gained / lost on the stock market from his tweet. But it would mean he had to step down for two years - possibly the two most critical years in Tesla's history.
IMO he shouldn't have published that, that was a bad call.
Refusing the settlement was stupid. Not only is he likely to lose, almost any defense will rely on him showing he didn't understand the words "funding secured" which will then open Tesla up to shareholder lawsuits.
If you're blind to this whole story, I suppose you could believe that. Who was the "potential buyer"? We heard VW and the Saudi fund, both who said it was nonsense.
Beyond that, according to the complaint, nothing was discussed with the board and there was no possibility that small shareholders could remain (or institutional investors for that matter) if Tesla went private. There was no discussed price. Musk wanted to "burn the shorts"; he was trying to do so for months. Whoops.
And have you considered that this is only just beginning? I mean, it's not impossible that this blows over, but it's also possible -- with a DOJ investigation ongoing-- that this whole thing implodes. The world is tiring of the games Silicon Valley plays.
I definitely think he should have taken the deal. The tweet was reckless.
>What’s changed is simply that Musk’s profile has risen while his staff’s ability to keep him in check has waned.
https://www.buzzfeednews.com/article/carolineodonovan/elon-m...
So sorry, you don't appear to understand the difference between using protected sources to acquire real information that can be published (documents or other evidence) and just publishing gossip and scuttlebutt.
>Mr. Rumayyan raised the idea of taking Tesla private and increasing the Saudi fund’s stake in it.
>More than a year later, the lawyers said, Mr. Musk and Mr. Rumayyan met at the Tesla factory on July 31. When Mr. Rumayyan spoke again of taking the company private, Mr. Musk asked him whether anyone else at the fund needed to approve of such a significant deal. Mr. Rumayyan said no, according to the person familiar with the letters.
I guess if Rumayyan testifies that he said he offered a deal then Musk may be ok. [Edit] Or maybe not.
I don't think the fine was a problem here for Musk.
Independent directors (in my opinion) would prioritize saving Tesla as an ongoing concern, even if it meant they remained a small boutique manufacturer (vs growing into an energy storage powerhouse).
TL;DR I want Captain Ahab at the helm, chasing his White Whale, swinging for the fences. I don't want Bob Lutz or Lee Iacocca.
I want people with the integrity not to commit securities fraud.
I'm not saying Musk should get off scot-free, but it'll be sad to see Tesla suffer, when companies like e.g. Uber or Equifax, for which dishonesty and negligence is standard operating practice, continue to function with no consequences. But then, I guess the universe isn't fair.
I'd say the opposite. Kicking out Musk will kill the stock price as the cult members sell, but in the long run Tesla might be better off being run by someone boring, as opposed to an unstable CEO who divides his attention a million ways and seems hell-bent on self-destructing via twitter. Over 40 executives have left this year and the latest CFO quit after a month on the job. For Tesla to become a solid company, that has to stop.
The optimal case would be Musk gets some sleep, talks to a therapist, and takes his ego down a notch. Then he could go back to spreading a vision instead of trying to harm people with flagrant lies. Unfortunately, the window of opportunity for this may have already closed.
I wonder what happened. My guess is that he must be on some sort of medication due to his battle with the Model 3. The tweet in question was inexplicable and I was very tempted to short the stock when I heard, but I didn’t want to bet against Musk. Now he seems mentally so fragile and his ability to lead Tesla is seriously in doubt.
Most companies CEOs are really careful and always act like nothing is wrong even as the ship sinks. In interviews Musk was refusing to answer certain questions from reporters accusing them of being from his short sellers, it all makes me wonder if the financials aren't so rosy.
There are tweets in support of this, like him talking about Ambien.
https://www.cnet.com/news/elon-musks-strange-strange-ambien-...
Ambien is known to produce some weird states of mind. I used it briefly and can attest to this, though I never got a visit from the walrus:
https://ambien.blogspot.com/2010/12/ambien-walrus-collection...
I admire Elon a lot, and I hope he takes a break and gets his head sorted. When I first heard about the tweets causing the SEC to sue I speculated to my wife that his subconscious mind had engineered this event to force him to take a break as some kind of mental self-preservation circuit breaker.
Musk couldn’t have been thinking straight when he sent that tweet, but we’ll likely never know the real story. I think that’s OK, he’s entitled to some personal privacy too.
Or did he get a winfall on Paypal and now throws a bunch of money at talented engineers?
I remind myself smart engineers might not be talented leaders.
You will be surprised how many people in developing and under-developed countries put in that kind of effort without breaking a sweat.
40 hour work weeks are the luxury of developed first world countries.
I usually just pay the tax bill, and move on. I'd love to be true to myself, too. But sometimes it just doesn't work. You mess up, you admit it, and no one is mad anymore.
You can lose a battle, but win a war.
Musk may not have been trying to manipulate the stock price when he said funding was secured, but if he was allowed to speak in such a sloppy, misleading manner, then other CEO's would start doing too too, which would have very bad consequences. So the SEC has to come down on Musk as hard as it can, and it has great powers for doing this.
Once this trial commences, how long will it take for the final verdict to be out?
Not much acquainted with the US judiciary, but the initial chargesheet by SEC says they demand a jury trial.
>Since Musk so far has chosen to fight this, it could take years to reach an outcome, said Bernstein analyst Toni Sacconaghi in a note Friday.
Like, did he realize that since the trial will take so long that by the time it is done, he will be able to circumvent some of the harsher penalties?
Years for the final verdict?
What’s the difference between Indian and US judiciary then?
I was of the opinion that Indian judiciary is among the slowest in the world coz of tons of backlogged cases and not enough judges.
Furthermore, I thought all legal cases in US closed in matter of months.
> In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.
He also spent ~12 years in prison (Though that was a separate action. The SEC can't send people to prison).
The SEC lets companies make corporate announcements on social media. If a company says "I was just acquired for $900 a share," I would consider that material information worth trading on. If a company says "funding secured," which has a very precise and technical meaning in corporate finance, in a corporate announcement, I would consider that to be similarly material.
Our capital markets won't work if straightforward misstatements in corporate announcements are permitted.
This isn't a case where someone committed a crime and carefully tried to hide their actions; this isn't a case that hinges on misunderstandings of the law. It is a case where someone essentially said "this is a final decision" and later clarified "by final, I really meant this was in preliminary stages, but I'm confident it can be finalized quickly."
That's a lot of ambiguity for the average layperson on a jury. I assume the SEC has a strong case, but this stuff is nuanced.
What would they go after the short sellers for? Shorting incentivises bubble popping and private antifraud research. I can't think of a single time short sellers trashed a healthy company, yet I can think of several times short sellers pricked something foul before it got too far along.